Current accounts: Time to jump ship?

It’s no secret that the current account market has gone from strength to strength over the past year or so. And one of the most competitive current accounts on the market at the moment is the Nationwide FlexDirect Account, which pays a handsome AER of 5.00% on balances up to £2,500.

But this attractive interest rate is only valid for 12 months, so if you opened the account when it first launched in March 2013, those 12 months are soon to come to an end, leaving you with an account paying just 1.00%. As a result, it could be time to move your money to a more competitive current account.

Here, we outline your options.

High interest rate accounts

If you’re looking for a straightforward interest-paying account, the closest account you will find to the Nationwide FlexDirect Account is the Clydesdale Bank Current Account Direct. It pays a competitive rate of 4.00% on balances up to a slightly higher £3,000.

However, be aware the rate is only valid until March 2015, after which time it reverts to 2.00%. You’ll also need to pay in at least £1,000 a month – but this shouldn’t be a problem as it is the same requirement the Nationwide account asks for.

Alternatively, the Santander 123 current account offers a tiered rate of interest depending on the balance of your account. You’ll earn 1.00% on balances from £1,000, 2.00% on balances from £2,000 and 3.00% on balances from £3,000 to £20,000.

On top of that, you’ll earn cashback of between 1.00% and 3.00% on some of your household bills that leave your account via direct debit. However, be aware you’ll need to pay £500 or more into the account each month, set up at least two direct debits and pay a £2 monthly fee.

Reward accounts

If you’d prefer to earn rewards with your account rather than interest, you’re an avid M&S shopper, and you can wait a little longer to switch your current account, the M&S Bank Current Account could be a good bet. Although M&S Bank already offers two accounts – the Premium Current Account and the Premium Current Account with insurance – they both charge a monthly fee. But from the summer, a new fee-free account will be launched.

The M&S Current Account will allow you to earn loyalty points whenever you use your debit card in M&S, with one point earned for every £1 spent. For every 100 points you earn, you’ll earn £1 in M&S vouchers and you’ll receive these vouchers each quarter.

In addition, you’ll receive a £100 M&S gift card just for switching to the account and you’ll be able to take advantage of exclusive offers on other products from M&S Bank such as savings accounts and loans. You’ll also receive a £500 overdraft, with the first £100 being interest-free – anything over this is charged at 15.9% EAR.

The account will be available to existing M&S Bank customers initially before being made available to everyone else.

Alternatively, the Halifax Reward Account pays a £5 reward each month you pay in £750, pay out at least two direct debits and stay in credit. You’ll also receive £100 in cash for switching to the account.

Halifax also allows you to earn cashback of between 5% and 15% on purchases from selected retailers such as Argos, Homebase, Domino’s Pizza, Morrisons and Oasis. You will need to select the offers you wish to activate but once you have, you’ll earn cashback whenever you shop at those retailers with your Halifax debit or credit card. The cashback is then paid into your account each month.

Another option is the NatWest Select current account through which you’ll earn at least 1% on qualifying purchases in ‘Cashback Plus Rewards’ when you spend at participating retailers such as Caffe Nero, New Look, BP, Tesco and Cineworld. Once your reward balance hits £5 you will be able to bank the cash, exchange it for gift cards from selected retailers or donate the money to charity. The scheme also applies to NatWest paid-for accounts.

Good customer service

If good customer service is a more important to you than interest rates and rewards, the First Direct 1st Account could be the current account for you. First Direct is renowned for its excellent customer service and you’ll receive £100 for switching to the account, and another £100 if you decide to leave within 12 months. Be aware you’ll need to pay in at least £1,000 a month to qualify for the cashback.

Get switching

Don’t forget that the Current Account Switch Service, which was introduced last September, means it now only takes seven working days to switch current accounts. So don’t hesitate to switch!

Please note: any rates or deals mentioned in this article were available at the time of writing. Click on a highlighted product and apply direct.

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